The Changing Face of Poverty: The Rise of Automation and the Gig Economy

February 25, 2016

by Kelly Barnes

What does the face of poverty look like? Of course there is the poverty we all recognize—-people sleeping on the streets or visiting the local soup kitchen. It goes without saying that the people in these dire situations should be our first priority. However, there are other, less obvious, faces of poverty and unfortunately their number is growing. The young professional who doesn’t know if she can pay her bills month to month as she floats from short term project to short term project. The graduate student who is living on a small stipend, collecting debt with no time to save for his graduation and inevitable three to six month job search. The immigrant who cannot afford to see doctors or pay for her medicine because although she got a degree in Canada, she is not eligible for healthcare without a full-time job. These are the faces of poverty who struggle silently. Ashamed that they can’t make ends meet and confused about how they got here when they did everything they were supposed to.

The face of poverty is changing. It may not be as easy to tell who is struggling as it once was and more people are are finding it difficult to keep their heads above water. Conventional wisdom was that education would protect us from poverty. Unfortunately, today, with such a high percentage of people earning university degrees, education is not the protection it once was.

The economy is changing and precarious employment is beginning to touch people on all rungs of the socioeconomic ladder. At one time, education was the ticket to a stable, full-time job with benefits. Unfortunately, for many, that is no longer the case. Full-time jobs have been largely replaced with part-time and contract work.

Many researchers and journalists have observed that we are transition into what is called the gig economy. The gig economy is a situation in which employers hire people for short-term contracts and temporary positions. We are currently moving toward an economy where a large portion of workers would be independent contractors. You have likely seen examples of the gig economy already. People who drive for Uber; rent out a room with AirBnB; work for pennies on Amazon Mechanical Turk; or sell their crafts or labor on Etsy and Fiverr. Each of these people is participating in the gig economy. There are benefits to this style of work such as increased flexibility, but at the cost of any stability. Many of these “gigs” are serving as supplemental income right now, but as jobs become more difficult to find, we will likely see more and more people come to rely on them. In fact, people will likely cobble together several “gigs” in order to make a livable wage, perhaps working many more total hours than a typical full-time job.

The primary loss in this new job climate is the stability and security that comes with a steady paycheck. A lack of stability is not only detrimental because of the stress it causes. It also makes it impossible to plan for the future. A contract worker may wonder, “When will I be in a position to start a family?”, “I have student loan debt. How can I pay that down and build up a savings?”, or “Will I ever be financially able to retire?”

In a time when the recession made budgets tight, employers have begun favoring these part-time and contract workers because they have realized they don’t have to provide benefits. Still more troubling, the economic recovery has been largely jobless. Companies laid people off, realized they could survive with less workers, and decided not to replace them. This is happening across industries. An example of this happening in London is the closing of the Kellogg’s factory which closed in December 2014 after 100 years. We even see it in education as universities transfer more and more classes from tenured faculty to the much cheaper contract faculty members.

In addition to the rise of the gig economy, there is an even greater shift coming to disrupt our current economic system: automation. I know it sounds crazy to say that the robots will steal our jobs, but bear with me. We have already lost many jobs to automation (think ATMS, automated toll booths, and self-check outs at the grocery store) and that trend is likely to continue. Watch this excellent video to really understand how automation may affect jobs and the economy: https://youtu.be/7Pq-S557XQU. In the past, unemployment often had to do with a mismatch between the jobs available and the training of the workforce. But, what happens when there are just not enough jobs for all the people who want them regardless of skills?

Before we panic, I am not saying that automation will bring about economic disaster. However, we are definitely going to need to rethink how our economies and social programs work. I don’t necessarily have any solutions to the changing economy I’ve talked about. However, one thing that many people have begun to think about is instituting a universal basic income or a guaranteed minimum income. Basic income is a social welfare benefit which guarantees all individuals and families an unconditional sum of money to live on each month in addition to wages earned from other places. Guaranteed minimum income is similar, except that it determines what a livable wage is for everyone and pays out an amount of money to people based on how much they already make that will essentially top them up. That is, everyone will be guaranteed to have AT LEAST that amount to live on per month. There is much to debate about the merits of these approaches, not least of which is, how would we pay for it? But, interestingly, there is support for basic income from both liberals and conservatives (for different reasons). In any case, I can promise it is a thing you will begin to hear more about.

When thinking about poverty and social change, it is important to not only look to the past or focus on the present. It is equally important to look to the future. Although we cannot predict what will happen with any certainty, we can attempt to foresee problems and work to prevent them. Think of it like preventative medicine. Issues of homelessness and severe poverty will continue to be a challenge we need to address. I am only suggesting that we also acknowledge that the faces of poverty are changing and they may not always look like what we expect them to.

A brief caveat: I, in no way, think issues of middle and upper class people who are struggling is more important than the groups who have always faced poverty. I don’t believe that we deserve more than anyone else just because we went to university or that anyone’s poverty is because they didn’t do the right things. I deeply understand the privileges I have had and the systemic problems that keep certain groups in poverty. However, I chose to write this piece because it is the poverty I know. The LPRC emphasizes lived experiences and this is mine and that of many of my fellow graduate students and friends as well.

Kelly Barnes is a researcher, writer, speaker and educator. She completed her PhD in Social Psychology from Western University in 2015. She studied prejudice and discrimination, particularly related to immigrants. She volunteers with the London and Middlesex Local Immigration Partnership, is a Girl Guide Brownie Leader, and is currently looking for opportunities to engage in community based research. Connect with Kelly through LinkedIn or on Twitter at @kbarne2.